Medicine

Competition vs. Coordination in health care: remember the patient!

Two of the most prominent policy recommendations for improving the health care “system” in the US have been increasing coordination of care and increasing competition. Both have very positive aspects, and I have written positively about the potential of both approaches, but also about the very real pitfalls. Coordination of care sounds like a “no-brainer”; everyone would like the physicians caring for them in one setting (say, in the hospital, or on a visit to a specialist, or in a rehabilitation facility or even nursing home or home care) to know what has been done to them previously, what the results have been, and what their previous providers thought. At the minimum, we want to think that there is communication, and that (often expensive) lab tests and x-rays are not repeated for no reason other than that our current provider cannot access those done somewhere else. In addition, coordination of care should mean that care is delivered in the most appropriate setting, often the most cost-effective setting, and that when we move from one setting (say, outpatient to inpatient, or inpatient to rehab) it is for good reasons based on what is best for our health, and not for bad reasons (say, what makes the most money for the providers).

Competition in health care also has value if it prevents artificially inflated charges and cost, just as it does in other parts of the market place. This may be most obvious in price-sensitive elective care, such as the Lasik® and contact lenses cited by Sen. Rand Paul, but is most important when it is absent and prices rise, such as in the case of hospitals (like Bayonne Medical Center; see The high cost of US health care: it's not the colonoscopies, it's the profit, July 28, 2013) that have a lock on a market. While business leaders often extol the benefit of competition, in fact all prefer to have a monopoly on the market (or at least be part of a oligopoly, where only a few players exist in a market and often collude on pricing) as it maximizes their profit. Airfares are a good example; I live in Kansas City, and if I fly to NYC, the round-trip fare for a non-stop is more than twice what it is to fly to Washington, DC. This was not always true; there used to be several airlines flying non-stop from KC to NY, but now there is one. There are at least 2 flying to DC.

OK, so both coordination of care and competition can be beneficial in the healthcare marketplace. But what about when they are in competition with each other? This is the subject of a “Perspective” in the New England Journal of Medicine by Katherine Baicker and Helen Levy, “Coordination versus competition in health care reform”,[1]August 29, 2013. They point out that despite the potential benefits of care coordination, and its older cousin, consolidation, it can be anti-competitive and some health care consolidations have been investigated by the Federal Trade Commission for this very reason. The problem is not an ideological commitment to competition, it is the results: the merger of two hospitals providing similar care raises prices, as does movement of care from low-cost venues such as doctor’s offices to higher-cost (and reimbursement) venues such as surgi-centers and hospitals (see again July 28 post). Baicker and Levy note the “subtler” issue of bundling, such as occurs in the case of computer software, where in order to get one product a company makes which you want, you are forced (or encouraged, through a big discount) to buy others you may not want; to get a lower price on that great browser you have to buy the operating system, or the word-processing software. It certainly can and does occur in healthcare: “…bundling offers providers who have market power in one product domain (such as tertiary hospital care) an opportunity to dampen competition in other product domains (such as primary care) by requiring insurers to contract with them for both products in order to receive discounts.”

Health information technology is a prime example of the tension. Heavily pushed, and subsidized, by the federal government as a way to improve coordination of care, it “can in theory promote both competition and coordination, but only if they are implemented well — an interoperable health information technology (IT) environment, for example, should promote both, but health IT without interoperability may simply lock patients in to their current providers or provider networks by making it difficult or costly to move their records, reducing competition. The opportunities for a win–win are limited.” Most providers who use EMRs will acknowledge their advantages (“I know what is happening elsewhere – at least within the system”) but complain about the huge amount of time it takes to enter data, and the fact that many large systems have bought the components of systems that facilitate billing, but often not those that offer great patient care advantages (such as the creation of “registries”, i.e., lists of the patients with similar conditions, such as diabetes, that may need similar regular interventions). And interoperability? No way. “Provider lock” – getting a healthcare system to spend so much money on your EMR product that they can’t change – has become the main strategy for most health IT companies. “The worst nightmare of most health IT companies,” says a friend who is in the field, “is that Apple will get involved and create a product that works better and is easy to use. And will probably be cheaper. So they want to lock you in.”

Baicker and Levy make three suggestions for how this tension might be resolved. One, look for “win-win” situations (could this be health IT? they ask). Two, have courts that enforce anti-trust laws look explicitly at the trade-offs. Three, look across silos to see how a seemingly positive change in one area would potentially have a negative effect in another. These are all good suggestions, but all limited and quite “iffy”. And all, I point out, as often is the case in rarefied discussions of health policy, missing the most important point: What is best for the health and health care of people, or patients? Not “consumers”, these largely hypothetical well-informed people whose problems are so non-urgent and budgets so large that they can shop for health care as they might for shoes, but the people who are sick, who are stuck in their health plans (whether government like Medicare and Medicaid or because their employer only offers one) or are uninsured?

This is where the doctors, who are often criticized (even by me; see Physicians' role in controlling health costs: do no financial harm, August 25 2013) are often right when they talk about meddling by bureaucrats. The issue is, however, that the policies adopted by Medicare and private insurers (often quite different, per Baicker and Levy) are indirect; they attempt to influence both the quality and cost of care by financial incentives or disincentives, and this permits – indeed encourages – gaming of the system, trying to maximize income while minimizing cost and risk. This is obvious, but is still true, and its impact is often to the disadvantage of people. The solution may well be more explicit regulation to directly address what needs to happen. Not micromanagement (“use this drug”), although following evidence-based treatment approaches might be among them, but those that explicitly encourage high-quality, cost-effective care. Coordinate care, but block monopolies; encourage consolidation between organizations providing complementary rather than the same services; do not pay increased costs because a system has a monopoly; demand that health IT systems be interoperable; measure quality outcomes that control for severity of illness and the socioeconomic risk factors of patients.

A single-payer health system, Medicare-for-all, could have the clout to make this happen. It could also run the risk of “non-competitiveness”. However, if we are all in, if even the most privileged have to use it, then that will protect the interests of the most vulnerable better than any form of competition that allows private companies to opt out of covering them, and puts the poor and sick and old in a separate system in which others do not have a stake.

It would be evidence of a core commitment to social justice.

[1]Baicker K, Levy H, “Coordination versus competition in health care reform”, NEJM 29Aug 2013; 369(9):789-91, DOI: 10.1056/NEJMp1306268

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